City finance director warns federal funding shifts could affect FY 2026 budget

Virginia Lovell, Director of Finance for the City of Newport News, told the city council on April 8 that changes at the federal level could affect the city's FY 2026 operating and capital budgets.

Lovell said the new administration has issued a large number of executive orders and an early Office of Management and Budget memo that briefly proposed a temporary freeze on federal financial awards. "Ultimately that order was challenged in court and rescinded, but the federal administration continues to signal their intent, to pause or eliminate funding for programs that don't align with the president's priorities," she said.

The nut graf: Lovell framed the potential exposure quickly: major programs that supply federal dollars to Newport News' operations include Health and Human Services, USDA, HUD, the Department of Justice and FEMA; DOT funding supports most street and bridge capital projects. If federal awards change, the city would focus on meeting legal obligations and preserving core services.

Lovell outlined where federal receipts appear in the recommended FY 2026 budget. She said "there are over 300 positions in the city that are partially or fully funded by federal funds." She named human-services programs (TANF, SNAP, Medicaid), HUD-supported public housing and affordable housing programs, DOJ and FEMA grants for equipment and training for fire and police, and victim-witness funding. Lovell said the city's recommended budget assumes roughly $76,000,000 in consumer-sensitive revenues tied to local employment and economic activity that could be affected if federal policy reduced jobs at major employers such as Jefferson Lab, the Hampton VA medical center and NASA.

Council members asked for timing and contingency information. Lovell said precise impacts will depend on the federal budget process and on whether particular grants contain enforceable agreements or conditions. A city attorney present said remedies or clawbacks "will depend on the legislation surrounding the grant and whether there's that ability to to claw it back. So it's really gonna be case specific."

Lovell said the capital-improvement program already includes tracking of all projects with federal funds so staff know which projects are in design versus construction and where city funding might be needed if federal awards were reduced. "We're hopeful those funds don't get pulled back on projects that are already substantially in construction. If it's in design, we'll have to come back to the table and have that discussion as a broader city, with the CIP on where those would fall in priority for city funding," she said.

On public-safety grants, Lovell described multiple FEMA awards that support equipment and training and cited victim-witness program funding. "So it's a little over about a million dollars per year that we receive there," she said; council members were later told one grant covers a majority of staffing ("over 20 positions") in the Commonwealth's Attorney's Office.

The city manager and council also discussed federal lobbying and a planned delegation trip to Washington, D.C., to discuss Jefferson Lab, DOE contracts and other federal priorities. Lovell closed by saying the budget will be implemented conservatively and staff will monitor federal actions closely and "may need to reallocate resources, to make sure that we can maintain our critical operations."

Less critical details: council members asked about specific capital projects including the Denbigh Interchange; city staff said VDOT and the city had not been notified of any delays.